Chapter-I Introduction 1. 1 Background of field work report It is reasonably simple exercise to identify a bank as an institution whose essential operation is to take deposit from the public and lend money. Bank accumulate a idle money from general public by providing attractive sound interest rate in their deposit and disburses the collected deposits as loan to business organization, industrial sector and needy people etc. so we can say that main task of commercial bank is to mobilize idle resources in productive areas by collecting it from scattered sources and generating profit.
Thus, bank fulfills the investment requirement of avers with the credit needs of investors. In this way bank plays an imperative role in our economy by providing effective service efficiently towards the attainment of economic development. 1. 2 Origin of Banking in Nepal The term bank is derived from the Italian word ‘Banca’ which means bench. According to various economists in past stage, Italian people did monetary transactions on the bench so that bank word emerged.
Bank is also known as ‘Banquee” in French language.
Modern banking originated in medieval Italy, despite strong Christian prohibitions against usury according to the canon law. The ‘Bank of Venice’ was established in Venice, Italy in 1157 AD as the first Banking institution in the world. The secondly banking institution namely ‘The Bank of Barcelona’ and “The Bank of Genoa’ in 1401 AD and 1407 AD respectively. Where “The Bank of England” of I-JK was established in 1694 AD as a Joint stock bank and later on in 1844 AD.
The bank of England became the first central bank of the world. The history of banking dates backs to sixteenth century.
However, in Nepal formal banking system was introduced only in November 1937 AD with the establishment of Nepal Bank LTD NBL) which is regarded as pioneer institution of modern banking system and serves as a sole financial institution of country for nearly two decades. Prior to establishment of this bank, the banking needs of people were fulfilled to certain extent only by organized financial institution the “TeJartha Adda”. Committee Boards “Udyog Parisad” was indeed a landmark in opening new avenue in field of banking industry and commerce.
Accordingly, NBL was established in November 1937 AD under Nepal banking act as Joint venture between government and private sector and replaced the TeJartha Adda by taking over its operation and overcoming its imitation. To regulate issue of currency, securing country wide circulation of Nepalese currency, achieving stable exchange rate to mobilize capital for economic development and for stimulation of trade, industry and banking sector, Nepal Rastra Bank (NRB) come into existence in April 26, 1956 as a country’s Central Bank.
After this NRB diverted its attention to wards, development of banking system by formulating relevant polices and procedure. In this connection Commercial Bank Act 1963 was promulgated, credit control regulation was formulated. Hence, further shouldering the banking services. The Rastriya BaniJya Bank (RBB) was established in unaer R Y64 wltn Tully government owned commercial Dank. Slnce financial sector in Nepal is small, it is ghastly growing. At present, banking system comprises of NRB, eleven commercial bank, three Development Bank, five Grameen Bikash Bank or Rural Development Bank.
Non bank financial system comprises 42 finance companies, 13 contractual saving institution (employees provident fund and insurance companies), 20 cooperative institution, 30 non-governmental organization, conducting limited banking activities transaction, postal saving offices of eleven ommercial bank, two are government controlled bank and rest are Joint venture bank. The commercial bank, Act1974 gets out regulation for licensing, supervisor and cancellation of commercial bank.
The Joint venture bank currently comprises nine in number, the first of which started operation in 1984. Finally, it is relevant to define the meaning of commercial bank according to Commercial Bank Act 2031 , which requires “Commercial Bank Means” a bank which operates currency exchange transactions, accepts deposits, provide loans and perform, deadline relating to commerce, and other than these banks which have been specified for the ooperative, agriculture, industry likely and other specified objective. 1. 2. Function of Commercial Bank Main function of commercial bank is to lending and borrowing of money from and to people It is oldest and main function. Although, in the previous years banks were viewed as acceptor of deposits than provider of loan, but modern commercial banks have to perform for overall development of trade, commerce, industry, agriculture including priority and deprived sector. The growing banking needs and habits of people and competitive environment has made the banking sector hallenging and their operation cannot be under emphasized in present context of market globalization.
The main traditional functions of commercial banks are highlighted below: Acceptance of deposits Current account Saving account Fixed deposit account Advancing Loans Cash credit Loan Bank overdraft Discounting bill of exchange Credit Creation Agency Function Collection and payments of cheques, draft, dividend. Payment of subscription, electricity, water bill, insurance, premium Miscellaneous Functions Custodian of valuables Issues of letter of credit Dealing with foreign exchange Supply of information of trade and commerce.
Modern banking functions are illustrated in the following figure : Hgure 1: Vltal Tunctlons perTormea Dy ull Origin of Modern Bank 1157 AD Establishment of bank of Venice 1401 AD Establishment of bank of Barcelona 1407 AD Establishment of bank of Genoa 1603 AD Establishment of bank of Amsterdam 1619 AD Establishment of bank of Haimberg 1694 AD Establishment of bank of England 1770 AD Establishment of The bank of Hindustan 1934 AD Establishment of Nepal Bank Ltd. 1957 AD Establishment of Nepal Rastra Bank Table 1: Origin of Modern Bank service BanKlng Ins tltutlons today The next stage was the money lenders.
He started advancing the coins on loan by charging interest. He started to keep some reserve as a safeguard. In this way thegoldsmith money lender become a banker who started performing the two functions of modern banking that of accepting deposits and advancing loans. 1. 3 Origin of Bank in Nepal Pre-modern banking system is found during the reign of Rana Prime Minister Ranoddip Singh in 1880 A. D. Towards the end of 14th century, Tanka Dhari meaning money under, were tne owners 0T tne monltory transaction aurlng tne perloa 0T Prime Minister Ranadip Singh established TeJarath . n 1938 state financial institute hich supply credit or loan against security. Establishment of banking system in Nepal is as follows 14th Century Introduction of “Tankadhari” 1938 B. S. Establishment of “TeJarath Adda” 1994 B. S. 2013 B. S. Industrial development centre 2016 B. S. Conversion of Industrial development center into Nepal Industrial development corporation. 2022 B. S Establishment of Rastriya BaniJya Bank 2024 B. S. Establishment of Agricultural Development Bank. 2041 B. S. Nepal Arab Bank Ltd. 2042 B. S.
Indosuez Bank Ltd. (Nepal Investment Bank) 2043 B. S. Nepal Grindlays Bank (Standard Chartered Bank) 2049 B. S. Himalayan Bank Ltd. Table 2: Establishment of Banking System in Nepal 1. 4 Company Analysis 1 Introduction 0T NaDll Ba NABIL Bank Ltd. is Nepal’s first major Joint venture Bank, which commenced operation on 12th July, 1984 under the technical services agreement approved by Nepal Rastra Bank. Finding the potential market, Dubai bank Ltd, Dubai in Joint venture with Nepal gave birth to the first Joint venture bank of Nepal.
It was established on 12th July, 1984 under name of Nepal Arab bank Ltd. Later the Dubai bank ltd, Dubai emerged with Emirates Bank Ltd, Dubai, with the help of special resolution passed in the AGM, the name Nepal Arab Bank Ltd. ave been changed to NABIL BANK LTD. Nabil Bank Limited had the official name Nepal Arab Bank Limited till 31st December 2001. Under this provision Dubai Bank Ltd, Dubai (Later acquired by Emirates Bank of International Limited, Dubai) was the first Joint venture partner of Nabil.
Nabil bank has a history and culture of its own of setting standard of operations and providing services. It provides international quality of services to its customers and some invaluable advices to its clients with the help of professionals hired by the bank. Nabil bank has expanded its size and volume of transactions and t gives employment to 372 staff members who are dedicated professionals working as a team for the cause of this organization. Today Nabil bank holds one of the strongest networks in and outside Nepal compared to other financial institutes of Nepal.
Nabil bank today can be termed as a full service bank in every sense which is able to meet entire rage of financial requirements and services of its customers and clients. It is the pioneer commercial bank of Nepalese economy which sets the benchmark for the industry. The management and the board members are the true assets of the organization who have made it what it is today. . 4. 2 The Core philosophy of Nabil Bank Core philosophy can be expressed in terms of vision mission and objective of any organization. Nabil Bank has the following Mission, Brand Promise and Vision.
They are: Mission: To become the bank of first choice Brand Promise: miour Bank at your service” Vision: It is expressed in terms of CRISP, where C = Customer Focused R = Result Oriented I = Innovative S = Synergetic P = Professional Objectives of Nabil Bank are: Promotion of national economy, society and individuals. Providing international quality banking services to the corporate. Enhancing the arket share. Not only providing employment opportunities but also career development pan for the employees of the bank. Providing quality banking services to the segment of customers in the commercial sector of Nepal.
Identify business prospect. Introduce modern banking technology to facilitate transactions. Innovating new technology to enhance and facilitates transactions along with convenience and customers satisfaction. Mobilizing capital in important areas. Entrepreneurship development. Maxlmlzlng tne market value 0T tne snare ana ensurlng Internal staDlllty along wltn internal strength. Participation in social causes. 1. 4. 3 Capital structure and Ownership structure Capital Structure Authorized Capital RS. 500 Million Issued Capital RS. 492 Million Paid Up Capital (4. 916. 544 Shares of Rs. 00 each) Table 3: Capital Structure of Nabil Bank Nabil has the authorized capital of Rs. 500 Million, Issued Capital of Rs. 492 Million and Paid up capital of Rs. 492 Million. Ownership Structure N. B. International Limited, Ireland Nepalese Public Nepal Industrial Development Corporation Rastriya Beema Sansthan 9. 67% Nepal Stock Exchange Limited 0. 33% Total 100% Table 4: Ownership Structure of Nabil Bank. The sharing holding of Nabil Bank Ltd can also be expressed in the form of following illustration. Figure 2: Ownership Structure of Nabil Bank Branches of Nabil Bank No.
Branches Established Kantipath Branch, Kantipath Kathmandu 2042/03/14 2. Nabil House-corporate Banking “Nabil House” Kamaladi, Kathmandu 2041/03/29 Jorpati Branch, Jorpati, Kathmandu 2040/03/29 4. New road Branch, New road Kathmandu 2042/12/29 5. Airport Exchange Counter, Tribhuvan International Airport 2046 6. Credit Card Counter, Thamel Kathmandu 2054 7. Lalitpur Branch, Lalitpur Kathmandu 2049/10/19 8. BirgunJ Branch, Adarshnagar, BirgunJ 2045/01/18 . Sugauli Branch, Parsa 2045/03/28 10. Biratnagar Branch, Goswara road Biratnagar 2048/09/26 11. Itahari Branch, Mainroad Itahari 12.
Pokhara Branch, Chipledhunga, Pokhara 2053/09/1 5 13. Credit Card Counter, Lakeside Phokara 14. Butwal Branch, Mainroad Butwal, Rupendehi 15. Bhalwadi Branch, Bhalwadi Rupendhi 2033/04/01 16. Bhairawaha Branch, Narayanpath Bhairawa 17. Tripureshwor Branch,Tripureshwor laDle 5: Brancnes 0T NaDll Ba 1. 4. 4 Managerial Aspects Nabil bank comprises of an experienced and qualified managerial team which is responsible for taking the bank into new heights of success and development. Formulating vital strategies, decision making in vital issues are some of the crucial activities of the top managerial level.
Some of the important top managers are presented below: Mr. Anil Gyawali (Chief Executive Officer) Central Operations Mr. Binay Kumar Regmi Chief Operating Officer Ms Neelam Tuladhar Head – Branches and Distribution Network Mr. Rajesh Kumar Upadhyaya Head – Information Technology Mr. Jyoti Bahadur K. C. Head – Central Trade Operations Ms. Anita Giri Head – Central Processing Center Mr. Rajeshwor Lal Shrestha Head – Administration Mr. Sulabh Kumar Shrestha Manager – HO Operations Risk Units Mr. Anil Kumar Khanal Chief Risk Officer Mr. RaJendra Bahadur Malla Head – PLU Credit Ms.
Neena Thapa Head- Credit Risk Management Mr. Binaya Nath Neupane Senior Credit Analyst Mr. ‘swar Man Shrestha Mr. Babu Ratna BaJracharya Mr. Yugesh Lal BiJukchhe Head -Operation Risk, KYC & AML Corporate Banking & Project Financing Mr. Deepak Shrestha Head – Corporate Banking and Infrastructure Ms. Namita Dixit Sr. Relationship Manager, Kathmandu Mr. Sanjay Nepal sr. Relatlonsnlp Manager, Katnmanau Mr. Gyanendra Pratap Shah Mr. Pushkar Raj Bhattarai Relationship Manager, Biratnagar Mr. Keshav Bahadur Nepali Relationship Manager, BirgunJ SME, Micro and Personal Lending Mr.
Gyaneshwor Acharya Head – SME Mr. SaroJ Pyakurel Head – PLU Mr. Pankaj Prakash Nepal Relationship Manager, Kathmandu Deposit Relation Management & E – Channels Mr. Ramesh Prasad Lohan’ Head- Deposit Relation Management Mr. Kabindra Prasad Shrestha Sr. Relationship Manager Mr. Suresh Prasad Tripathee Mr. Buddhi Ram Sharma Head – Inward Sourcing Mr. NiraJ Sharma Head Card Division & E-Channel Finance & Planning Mr. Krishna Dutta Bhattarai Chief Finance Officer Treasury Mr. Mohan Subba Head – Treasury Human Resources Mr. Roshan Koirala Head – Human Resources Bancassurance Mr.
Satish Sagar Dawadi BM LP & Head- Bancassurance Internal Audit Ms. AnJuli Shrestha Head – Internal Audit Nabil Investment Banking (Subsidiary of Nabil) Mr. Praveen Raman ParaJuli CEO- Nabil Investment Banking (on deputation) Table 6: Managerial Team of Nabil Bank. NaDll Dank comprises 0T tne Tollowlng Board 0T Dlrectors . Table 7: Board of Directors of Nabil Bank 1. 4. 5 Organization Structure I ney are presented The organizational structure or form of a bank has evolved over a number of years in order to perform the various roles of the bank and also to provide the services efficiently and effectively.
Banks are usually organized according to the functions they perform to the extent possible so that the bank can run smoothly. Nabil Bank has a Branch Banking Organization Structure. The structure of NABIL is such that it facilitates all the functions carried out by the whole organization and also supports the huge volume of transactions that takes place in the bank on daily basis. The bank has many departments to facilitate the business processes that have good coordination amongst each other. The bank has a line of authority that flows from the top to the bottom of the organizational hierarchy however the flow of information in
NABIL uses both top-bottom and bottom-up approach. The organizational chart of NABIL as obtained from the bank is as follows: Figure 3: Organization structure of Nabil bank. 1. 4. 6 Major Business The major businesses of Nabil Bank are categorized into the following headings. They are I. Business Banking It includes major two businesses. They are loan and trade finance. They are briefly explained below: A) Loan: At Nabil Bank the following loan products are available ,they are : Working Capital Loan Overdraft / Short term loans to finance the day-to-day business activities.
Basically, his loan helps to build up the inventory and receivables to a desired level, against which the loan will be disbursed. Fixed Capital Loan It is to finance the projects or acquire fixed assets. Generally, this is a long term loan for acquiring or purchasing machinery, equipment, land and building. The tenure of repayment is cash flow based. Import Loan It is to finance international and local trade transactions through letter of credit, and thus ultimately help in importing using the extensive banking network around the globe. Export Loan It is to finance on the funding requirement for completion of various stages of the